Measurement in a Continuous World:
How the modern organization takes it's
own pulse
Jim Highsmith
Executive Consultant
0
10
20
30
40
50
60
70
80
90
100
1 2 3 4 5
Iterations
Stories
Planned
Revised
Completed
Velocity is Killing Agility!
2
A Measure of Success
Cutter Sr. Consultant Helen Pukszta
“I recently asked a colleague [CIO] whether he would
prefer to de...
Mixed Messages
Be Flexible
Conform to
Plan
Dysfunctional Measurement Systems
Step 1: Measurement system installed.
Step 2: Performance tends to improve while people ...
Facing the Future
“Perhaps the most important question facing leaders
today is this: How do you build an organization that...
Battleground of the Future
Enterprise
(Adaptive
Leadership)
TalentCustomers
Shareholders/
Financial
Markets
Purpose
Do Agi...
How Important is Health (Being)?
¨  “Organizations that focused on performance AND
health simultaneously
¨  were nearly ...
Extensive Beyond Performance Research
¨  Surveys: 600,000 respondents, 500 companies
¨  6,800 CEO’s & senior executives
...
Multi-dimensional and Holistic
“Performance evaluation is a holistic
assessment of delivery and behaviour.”
TW Live Presen...
Multi-dimensional and Holistic
“You get a lot of negative behavior when you have
narrow metrics that really don’t represen...
Creating a Value Focused Culture
¨  Inspire around a value-based vision
¨  Make Value Visible
¤  Define a common curren...
The Agile Triangle
Value
(Releasable Product)
Quality
(Reliable, Adaptable Product)
Constraints
(cost, schedule, scope)
Enterprise Value Contributions
EVCs
Purpose
Ultimate
Reason
Social
Action
Learning &
Adapting
Profitability
Faster to
Mark...
Value Dials
¨  Purpose
¤  Reduction in specific target diseases (health care organization)
¤  % profit spent on social ...
Value Calculation Framework
Value Cost
Portfolio Financial Business Case (NPV/IRR) Portfolio T-Shirt Sizing
Project Same a...
Value Point Assignment and Allocation
NPV = $5 million
“Sales Increase”
5,000 Value Points
…allocation of Value Points
acr...
Features with Value Points
As a sales associate,
the ability to calculate
the total amount of
the sale.
C-5
As a sales exe...
Reporting Differently (Report courtesy Jeff DeLuca)
Physical
Design
(33)
Apr 2001
JM
Hubbing
(20)
Apr 2001
JM
Satisfy
Tran...
Is Quality
really
important?
Quality Issues (technical)
¨  Code quality
¨  Design quality
¨  Automated testing
¨  Technical debt reduction
¨  Blah...
Historical Dilemma
Features Quality
23
Business
Outcome
Technical
Outcome
What if?
24
Features ?
Business
Outcome
Business
Outcome
What if?
25
Features Cycle Time
Business
Outcome
Business
Outcome
The Consequences of Waterfall
MaintainPlan, Develop, Build, Test, Release
12+/- months
Hundreds of features
Serial Develop...
Agile & Continuous Delivery
Milestone 1
R1 R2 R3 …
Feedback is immediate, a matter of weeks.
Consequences of low technical...
Summary
28
¨  A single release instance (waterfall) encourages
trading off quality for features.
¨  Aggregate releases o...
Cycle Times
¨  Feature/Story—release from backlog to deploy
¨  Release Frequency—how often features are
deployed
31
Principle/
Practice
Management team embraced?
Not so
hot
Barely
started
Making
progress
Extremely
well
Adapting to
Chan...
Do you do Management Retrospectives?
32
Sample 360 Profile (Agility Consulting)
Intangibles
Year Intangible % Tangible %
1982 38 62
1992 62 38
2000 85 15
Impact of Intangibles on Market ValueHow Leaders...
“The competitive advantage of the twenty-first
century is increasingly derived from hard-to-copy
intangible assets such as...
More Information
¨  White paper: “Adaptive Leadership: Accelerating Enterprise
Agility,” Jim Highsmith, Available on www....
Measurement in a Continuous World - Jim Highsmith
Measurement in a Continuous World - Jim Highsmith
Upcoming SlideShare
Loading in...5
×

Measurement in a Continuous World - Jim Highsmith

234

Published on

Published in: Leadership & Management
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
234
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
10
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Measurement in a Continuous World - Jim Highsmith

  1. 1. Measurement in a Continuous World: How the modern organization takes it's own pulse Jim Highsmith Executive Consultant
  2. 2. 0 10 20 30 40 50 60 70 80 90 100 1 2 3 4 5 Iterations Stories Planned Revised Completed Velocity is Killing Agility! 2
  3. 3. A Measure of Success Cutter Sr. Consultant Helen Pukszta “I recently asked a colleague [CIO] whether he would prefer to deliver a project somewhat late and over-budget but rich with business benefits or one that is on-time and under-budget but of scant value to the business. He thought it was a tough call, and then went for the on-time scenario. Delivering on-time and within budget is part of his IT department’s performance metrics. Chasing after the elusive business value, over which he thought he had little control anyway, is not.”
  4. 4. Mixed Messages Be Flexible Conform to Plan
  5. 5. Dysfunctional Measurement Systems Step 1: Measurement system installed. Step 2: Performance tends to improve while people figure out the system. Step 3: People, under pressure, focus on measurement goals rather than outcomes. (Always a disconnect between the desired outcome and the measurement. Example: (1) productivity; lines of code. (2) productivity; velocity Step 4: Time Metric Desired Outcome Performance measurement Source: Rob Austin, Measuring and Managing Performance in Organizations
  6. 6. Facing the Future “Perhaps the most important question facing leaders today is this: How do you build an organization that performs flawlessly and evolves rapidly, one that delivers sterling results today and changes fast enough to be relevant tomorrow?” Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, Scott Keller & Colin Price (McKinsey & Co.)
  7. 7. Battleground of the Future Enterprise (Adaptive Leadership) TalentCustomers Shareholders/ Financial Markets Purpose Do Agile Be Agile
  8. 8. How Important is Health (Being)? ¨  “Organizations that focused on performance AND health simultaneously ¨  were nearly twice as successful as those that focused on health alone, ¨  and nearly three times as successful as those that focused on performance alone.”
  9. 9. Extensive Beyond Performance Research ¨  Surveys: 600,000 respondents, 500 companies ¨  6,800 CEO’s & senior executives ¨  Reviews: 900 books & academic journals ¨  Personal interviews: 30 CEO’s ¨  Data from: >100 McKinsey clients
  10. 10. Multi-dimensional and Holistic “Performance evaluation is a holistic assessment of delivery and behaviour.” TW Live Presentation, Bjarte Bogsnes, Vice President, Performance Management Development, Statoil; Chairman, Beyond Budgeting Round Table Europe
  11. 11. Multi-dimensional and Holistic “You get a lot of negative behavior when you have narrow metrics that really don’t represent the complexity of the business. Instead we ask our associates to view performance holistically, versus focusing on a few specific variables.” --CEO of Gore, in What Matters Now, Gary Hamel
  12. 12. Creating a Value Focused Culture ¨  Inspire around a value-based vision ¨  Make Value Visible ¤  Define a common currency and language ¤  $ @ portfolio, value points @ feature level ¨  Craft a Value Framework ¤  Value drivers ¤  Portfolio, Projects, Release, Feature, Iteration ¨  Make Value Actionable ¤  Everyone accountable for value outcomes ¤  Assemble a lightweight toolkit
  13. 13. The Agile Triangle Value (Releasable Product) Quality (Reliable, Adaptable Product) Constraints (cost, schedule, scope)
  14. 14. Enterprise Value Contributions EVCs Purpose Ultimate Reason Social Action Learning & Adapting Profitability Faster to Market Reduce WIP Be Continuous Increased Revenue Open New Markets Facebook Purpose: “To make the world more open and connected.”
  15. 15. Value Dials ¨  Purpose ¤  Reduction in specific target diseases (health care organization) ¤  % profit spent on social responsibility ¨  Financials ¤  Headcount Reduction (# of H/C reduced or avoided) x (Average burden rate for region & job type) ¤  Headcount Turnover ¤  Risk Avoidance (Value of risk) x (Probability of occurrence) ¤  Time-To-Market (Value of increased market segment share) x (# weeks accelerated to market) ¨  Learning and Adapting ¤  New practices initiated this quarter ¤  …
  16. 16. Value Calculation Framework Value Cost Portfolio Financial Business Case (NPV/IRR) Portfolio T-Shirt Sizing Project Same as above Inception - Revised Cost Estimate Iterative Development - Monthly Forecast Capability Decision Making Sweet Spot Where we want to start/continue to make better informed Value Engineering Decisions ROI = Value/CostFeature Story MoSCoW or other prioritization method Story Points (3,5,8) Value Cost Portfolio Financial Business Case (NPV/IRR) Portfolio T-Shirt Sizing Project Same as above Inception - Revised Cost Estimate Iterative Development - Monthly Forecast Capability Decision Making Sweet Spot Where we want to start/continue to make better informed Value Engineering Decisions ROI = Value/CostFeature Story MoSCoW or other prioritization method Story Points (3,5,8) Top Down – Allocation of Value Bottoms Up – Calculation of Cost We need to understand both Value and Cost at the Capability/Feature level. Source: Pat Reed
  17. 17. Value Point Assignment and Allocation NPV = $5 million “Sales Increase” 5,000 Value Points …allocation of Value Points across Capabilities and Features… Feature A (35%) NPV = $---K “Customer Experience” 250 Value Points Feature B (30%) Feature C (15%) Feature D (20%) Feature A (25%) Feature B (50%) Feature C (25%) Feature A (10%) Feature B (25%) Feature C (40%) Feature D (5%) Feature E (20%) Feature A (35%) Feature B (45%) Feature C (20%) Feature A (60%) Feature B (20%) Feature C (20%) NPV = $---K “Other” 150 Value Points Project A: NPV = $5 million Value Points get allocated across all Capabilities and Features based upon their relationship to individual Business Value Dials Capability A (25%) Capability B (40%) Capability C (35%) Capability D (100%) Capability D (100%) Source: Pat Reed
  18. 18. Features with Value Points As a sales associate, the ability to calculate the total amount of the sale. C-5 As a sales executive, the ability to view all sales by product type, geographic region, and sales associate. C-8 As a sales supervisor, the ability to Verify the adequacy of the Customer’s Credit Rating. C-3V-13 V-11 V-2 Feature Points are a calculation of cost. Value Points are an allocation of revenue.
  19. 19. Reporting Differently (Report courtesy Jeff DeLuca) Physical Design (33) Apr 2001 JM Hubbing (20) Apr 2001 JM Satisfy Transport Item (16) Feb 2001 JM Route through Bearer System (25) Feb 2001 JM Protected Route (8) Apr 2001 JM Retest Trail Diversity (18) Apr 2001 CA Save Trail Design (10) Apr 2001 PS A-Z One Hop (14) Dec 2000 PS A-Z 2 Hops (21) Dec 2000 PS A-Z Multiple Hops (22) Dec 2000 PS Establish Pathing (19) Dec 2000 PS Comply with Diversity Constraints (13) Mar 2001 PS Establish Cost (7) Dec 2000 PS Select Bearer System (7) Dec 2000 PS Logical Bearer Systems (13) Apr 2001 PS Establish Products and Models (9) Oct 2000 JM Explode Design Model (19) Feb 2001 JM Establish Diversity Levels (19) Oct 2000 PS Generate Constraints (20) Dec 2000 LT Check Constraints for A Pathing Point (13) Jan 2001 LT Capture Details (17) Dec 2000 PS Generate and Track Site Events (16) Apr 2001 JM Generate and Resolve Order Activities (13) Mar 2001 JM Run Autodesign (24) Apr 2001 JM Establish Product (12) Oct 2000 PS Establish Product Attributes (15) Nov 2000 PS Establish Product Attribute Groups (12) Nov 2000 PS Establish Templates (7) Dec 2000 PS Establish Autodesign Mapping (6) Dec 2000 PS Protection (4) Mar 2001 PS Autodesign Transport Shortfall (14) Apr 2001 JM Establish Site (11) Oct 2000 LT Establish Node (14) Oct 2000 LT Establish Network Element (9) Oct 2000 LT Establish Equipment (15) Dec 2000 LT Establish Design Items For Models (26) Oct 2000 JM KEY: Work In Progress Attention Full Completion Progress Bar Establish Product Catalog (PC) Establish Network Arrangement (NW) Establish Order (OM)Establish Diversity (DV)Establish Design Product (DP) Inter-System Pathing (XP) Intra-System Pathing (SP) System Selection (SS) Establish Trails (TR) Establish User (11) Nov 2000 JM Users (UM) Establish CIX Trail Design (15) Dec 2000 CA Lookup CI Trail Design (23) Apr 2001 LT 100% 100% 100% 100% 100% 100% 100%42% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%89% 89% 1% 100% 100% 1% 0% 0%
  20. 20. Is Quality really important?
  21. 21. Quality Issues (technical) ¨  Code quality ¨  Design quality ¨  Automated testing ¨  Technical debt reduction ¨  Blah, blah, blah is what your business partners hear!
  22. 22. Historical Dilemma Features Quality 23 Business Outcome Technical Outcome
  23. 23. What if? 24 Features ? Business Outcome Business Outcome
  24. 24. What if? 25 Features Cycle Time Business Outcome Business Outcome
  25. 25. The Consequences of Waterfall MaintainPlan, Develop, Build, Test, Release 12+/- months Hundreds of features Serial Development Weeks Few Features Serial Development Feedback from poor quality is long term Consequences of low quality difficult to determine
  26. 26. Agile & Continuous Delivery Milestone 1 R1 R2 R3 … Feedback is immediate, a matter of weeks. Consequences of low technical quality are easier to determine. Goal Not Features, but Continuous Stream of Value! 3-6 mths Weekly Releases Milestone 2 R1 R2 R3 … 3-6 mths Milestone 3 R1 R2 R3 … 3-6 mths
  27. 27. Summary 28 ¨  A single release instance (waterfall) encourages trading off quality for features. ¨  Aggregate releases over time encourage a business trade off of features or cycle time ¨  Aggregate releases show that high quality increases feature delivery and reduces cycle time
  28. 28. Cycle Times ¨  Feature/Story—release from backlog to deploy ¨  Release Frequency—how often features are deployed
  29. 29. 31 Principle/ Practice Management team embraced? Not so hot Barely started Making progress Extremely well Adapting to Changes Exploring, not planning Engaging & inspiring staff Riding paradoxes Do You Evaluate Yourself?
  30. 30. Do you do Management Retrospectives? 32
  31. 31. Sample 360 Profile (Agility Consulting)
  32. 32. Intangibles Year Intangible % Tangible % 1982 38 62 1992 62 38 2000 85 15 Impact of Intangibles on Market ValueHow Leaders Build Value, Ulrich & Smallwood Intangibles assets are not reflected on Balance Sheets. Intangibles are reflected in Market Capitalization. 34
  33. 33. “The competitive advantage of the twenty-first century is increasingly derived from hard-to-copy intangible assets such as company culture and leadership effectiveness.” –Keller & Price
  34. 34. More Information ¨  White paper: “Adaptive Leadership: Accelerating Enterprise Agility,” Jim Highsmith, Available on www.thoughtWorks.com. ¨  My blog: www.jimhighsmith.com. ¨  Twitter: @jimhighsmith 36
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×